The way I've heard the Olivers tell the story is that the initial concept for the first Dizzy was to do a cartoony style of game which would appeal to younger players, which led to the requirement for a main character with a bold, simple look who could be represented with the very basic graphical limitations at the time (large pixels, few colours). They arrived at the idea of a character who was basically just a big smiley face with arms and legs (a similar look to the Mr Men) because that meant the face - the part you identify as a character with personality - was as large as possible. Additionally, Philip and Andrew wanted to make use of the Panda Sprites software which they had recently created, specifically its ability to generate rotated images of a sprite but this only worked convincingly for simple regular shapes.

After drawing this character, they realised he looked a bit like an egg and so that was what he was decided to be. In order to make use of the rotation trick they had the character roll and somersault as he jumped. The story goes that one day their dad walked into the room as they were testing this function, saw what the character on screen was doing and said something like "He'll get dizzy doing that." And voila, the character had a name, and the rest is history!